Count on them: Death, taxes and used vehicles
Photo credit: BLOOMBERG
Death and taxes are two things we know we can count on.
Here's one more: The new cars and trucks on display this week at the Detroit auto show will become used vehicles someday.
That's why folks including Larry Dixon, an analyst with NADA Used Car Guide, and Eric Ibara and Alec Gutierrez, analysts with Kelley Blue Book, spent time at the show looking at what's coming down the road.
Dixon, Ibara and Gutierrez studied new-vehicle attributes such as exterior styling, engine specs, fuel economy and other factors such as price and sales to rental fleets, they said in interviews.
The goal is to get an idea of how the price and consumer demand for the latest cars, pickups and crossovers will hold up once they have thousands of miles and hundreds of hours of seat time on them, and are for sale for the second or third time.
Dixon said the calculations are based on "what we expect from a used-value retention standpoint and how the vehicle that has been unveiled -- based on what we are told and what we are seeing -- is going to compare to the outgoing model or to a model in its competitive set."
Ibara, who heads residual values consulting at Kelley, says his auto show evaluations are informal because, of course, he can't drive the vehicles. But his observations and those of his colleagues are interesting.
For instance, Kelley has a "good feeling" about the 2015 Chevrolet Colorado mid-sized pickup. Ibara and Gutierrez agree. The only caveat is its price, which has not been announced.
"If they increase the price by $5,000, then it may not have" a comparable percentage increase in residual value, Ibarra said. "It will hold its value as a used vehicle better but the percentage [increase] may not be a significant increase."
Dixon said Ford did a "phenomenal job" with the 2015 F-150 full-sized pickup.
All were complimentary of Chrysler's redesigned 2015 200 mid-sized sedan, which will be equipped with an all-wheel-drive system and nine-speed automatic transmission.
But none had anything good to say about the current 200, which is sold mainly to rental fleets.
"It almost has to do better -- look at the car it's replacing," Gutierrez said of the new and current 200. "It's so much better."
This is Chrysler's opportunity to reposition the 200 as a vehicle that consumers want, they agreed.
"It wouldn't make sense for them to spend so much money on redesigning a vehicle only to continue to send so many into rental," Ibara said. "The anticipation is that the rental volume will decrease, but we need to hear that from Chrysler."
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